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Singapore

MAS sets up review group to boost the development of Singapore's stock market

New listings on the Singapore Exchange (SGX) have been dwindling, and there has been a steady stream of delistings over the years.

MAS sets up review group to boost the development of Singapore's stock market

Signage of Singapore Exchange Limited (SGX) is pictured inside the company headquarters in Singapore on Mar 23, 2023. (File photo: AFP/Roslan RAHMAN)

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SINGAPORE: A review group has been set up to give recommendations on how to strengthen the development of Singapore's stock market, the Monetary Authority of Singapore (MAS) announced on Friday (Aug 2).

It comes after the Singapore Exchange (SGX) had its worst year for listings last year.

The review group is led by Second Minister for Finance Chee Hong Tat, who is also the Transport Minister and a board member of MAS.

It will involve private sector stakeholders and public sector representatives, including MAS managing director Chia Der Jiun, Temasek Holdings CEO Dilhan Pillay and the Finance Ministry's permanent secretary for development Lai Chung Han.

The group will recommend a set of measures and complete their report within 12 months, MAS said.

SINGAPORE'S FLAGGING STOCK MARKET

For the first half of 2024, there was only one initial public offering (IPO) on the SGX.

In 2023, there were six IPOs - far fewer than the figure of 11 in the year before.

According to Deloitte, just US$35 million was raised in 2023, a 92 per cent decline from 2022.

Hong Kong, Singapore's rival as an Asian financial hub, had 68 IPOs last year and raised US$5.3 billion.

Besides struggling to attract new listings, SGX has also seen double-digit delistings in recent years. In the first five months of 2024, data from SGX showed at least 10 exits.

"I think everyone can see that there is a need for us to do something to improve the situation that we face today in Singapore, to make ... listing in Singapore a more attractive (option) for companies," Mr Chee told reporters on Friday, adding that Singapore would want to attract both homegrown firms and those from abroad.

Forming a review group is an efficient way to access ideas and views from different experts, he said.

"There will be differences in opinions, but that is part of the value of conducting such a review," he said. After consulting a wide group of people, the review group will decide what the best set of measures are.

SGX said it welcomes the announcement by MAS which recognises the "vital role" of the stock market. 

"Only a whole-of-ecosystem approach can lead to transformative actions that will give fresh impetus to improving liquidity and listings in Singapore’s equities market," an SGX Group spokesperson said, adding that the exchange will work closely with the review group, while continuing other efforts such as its regional partnerships and investor outreach.

IMPORTANCE OF THE STOCK MARKET

MAS said that a dynamic equities market is an important part of the capital formation value chain, along with Singapore's growing private equity and venture capital ecosystem.

"A deep and liquid public equities market enables companies to access capital as they expand regionally and globally," the financial regulator said in a media release.

"Improving the attractiveness of Singapore's equities market can therefore enhance Singapore's standing as a vibrant enterprise and financial hub."

MAS noted that the government has already introduced other initiatives to support enterprise financing and boost the Singapore stock market, such as setting up funds to support IPOs of high-growth companies.

The review group will have two broad areas of focus - the Enterprise and Markets workstream will look at addressing market challenges, fostering listings and facilitating market revitalisation.

The Regulatory workstream will focus on enhancing the regulatory regime to help the market grow and build investors' confidence.

People with experience in corporate finance, investment banking, asset management, legal services and corporate governance will be involved in the review process.

The review group will assess the state of the market and existing efforts, as well as come up with recommendations on how to attract primary and secondary listings, improve liquidity and promote the development of SGX-listed companies. 

It will also propose outreach and communication strategies to support enhancing the attractiveness of Singapore's equity market.

In response to a suggestion that sovereign wealth fund GIC should invest in the Singapore market, Mr Chee previously said it is "not the solution".

On Friday, he said Temasek Holdings and GIC have to look at what gives them, as investors, the best returns.

"So if there are good companies, there are good opportunities that they can invest in Singapore, GIC and Temasek are both able to do so," he said.

Temasek Holdings earlier said that reviving the stock market is “not (its) primary concern”. GIC said it invests globally and would be open to investing in companies based in Singapore that have a good, global business.

Source: CNA/an(gs)
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